U.S. stock markets pulled back slightly from record levels on Friday, led by declines in technology shares, though overall performance still pointed to another positive week for Wall Street.
As of late morning trading, the S&P 500 slipped 0.4% from its record high set the previous day, while the Nasdaq composite dropped 0.6%. In contrast, the Dow Jones Industrial Average gained 52 points, or 0.1%, after briefly approaching its own all-time high set last December.
Markets rallied earlier in the week amid growing expectations that the Federal Reserve might lower interest rates at its next meeting in September. Lower rates can encourage borrowing and investment, helping boost the economy and asset prices, though they also pose a risk of reigniting inflation.
However, Thursday’s disappointing inflation report at the wholesale level led traders to slightly reduce their expectations for rate cuts, even though the majority still anticipate them. These expectations have driven Treasury yields lower recently, and yields remained largely stable after a mix of economic data on Friday.
Retail spending met forecasts with a modest increase last month, while factory activity in New York surprisingly grew. However, industrial production nationwide declined, defying expectations of growth. Meanwhile, consumer sentiment slipped due to renewed inflation concerns, despite predictions of a slight improvement.
Joanne Hsu, who leads the University of Michigan’s consumer sentiment survey, noted that although fears of economic collapse have faded since April—when then-President Trump imposed sweeping global tariffs—consumers still expect inflation and unemployment to worsen in the months ahead.
In corporate news, UnitedHealth Group soared 13.7% after Warren Buffett’s Berkshire Hathaway disclosed it bought nearly 5 million shares worth about $1.57 billion. The insurer’s stock had been down roughly 50% for the year due to earlier challenges, making the investment notable given Buffett’s reputation for value buying.
Conversely, Berkshire Hathaway’s own shares dipped 0.3%.
Applied Materials was among the biggest drags on the market, falling 13.2% despite beating earnings expectations. Investors focused instead on its warning of declining revenue in the current quarter. CEO Gary Dickerson highlighted ongoing uncertainty, especially related to business in China, as a key factor.
Sandisk also declined 5.1%, even though its earnings surpassed analyst forecasts. The negative reaction was driven by a weaker-than-expected outlook for the next quarter.
Global markets were mixed. China’s Shanghai index rose 0.8%, while Hong Kong’s fell 1% after new data showed a slowdown in China’s economy. Retail sales, investment, and industrial output all posted their weakest growth of the year, suggesting Beijing may need to introduce new economic stimulus measures.
Japan’s Nikkei 225 surged 1.7% following a stronger-than-expected GDP report. Meanwhile, European markets were uneven ahead of a scheduled meeting between President Trump and Russian President Vladimir Putin, which could influence developments in the war in Ukraine.
In the bond market, the yield on the 10-year Treasury rose slightly to 4.31%, while the 2-year yield remained unchanged at 3.74%, reflecting ongoing anticipation of future Fed policy moves.
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Most U.S. Stocks Slip on Inflation Surprise, but Big Tech Stabilizes Wall Street
Most U.S. Stocks Slip on Inflation Surprise, but Big Tech Stabilizes Wall Street
